UN human rights experts have condemned the ‘egregious’ business practices of global private equity and investment firms which, they say, have transformed the global housing landscape by raising rents and forcing some tenants out of their homes.
In a statement released on Tuesday, the experts, Leilani Farha, the UN Special Rapporteur on the right to adequate housing, and Surya Deva, Chairperson of the Working Group on Business and Human Rights, said that, by expending unprecedented amounts of capital on housing, these firms have converted homes into financial instruments and investments, buying up affordable properties, upgrading them and substantially raising rents, putting them out of the reach of those living on low incomes.
The experts cited “countless” examples of tenants whose rents increased by up to 50 per cent, almost immediately after their buildings were bought by private equity firms, making it impossible for them to remain.
They singled out one firm in particular, Blackstone Group L.P., owner of thousands of housing units across North America, Europe, Asia and Latin America, which they described as one of the biggest landlords in the world and a “frontrunner” in the implementation of a business model that classifies affordable housing as “undervalued.”
The experts noted their concerns in a letter to Blackstone, describing the practices as being inconsistent with international human rights law, with respect to the right to housing. Blackstone and similar companies, they say, have a responsibility to respect human rights under the UN Guiding Principles on Business and Human Rights.
“Real estate equity firms,” the statement says, “have an independent responsibility to respect human rights, which means that they need to conduct human rights due diligence in order to identify, prevent, mitigate and account for how they address adverse impacts on the right to housing.”
According to the Reuters news agency, Blackstone responded to the independent UN experts on Monday with a letter, arguing that the firm has contributed to the availability of well-managed rental housing, and addressed the chronic undersupply of housing in major metropolitan centers around the world through injections of private capital.
The UN experts also wrote to the Governments of the Czech Republic, Denmark, Ireland, Spain, Sweden and the United States, pointing out that preferential tax laws, and weak tenant protections, have allowed the transfer of low-income housing into financial investments, to hugely expand.
“We remind States of their human rights obligations to regulate investment in residential real estate so that it supports the right to adequate housing and in no way undermines it. This cannot be left to the private sector to undertake on a voluntary basis,” the experts said, criticizing a lack of monitoring or accountability mechanisms. “While gold is a commodity, housing is not, it’s a human right.”